"The level of resourcing, the level of funding means typically there will only be one staff member on in the evening, overnight," she said.

"So that if a child was to abscond, the staff member is not able to leave the unit and this is when children are preyed on by paedophiles."

She says the Government needs to look at the fundamentals of the system including the resourcing of the child protection agencies.

"When they (child protection agencies) are coming out and saying to the Government that they are underfunded and therefore children are not safe, that should be ringing alarm bells within Government," Ms Mikakos said.

"They need to take urgent action to ensure that our vulnerable children are safe when they are in the state's care."

Community Services Minister, Mary Wooldridge, concedes the report highlights "a number of challenges within the child protection system."

"But on each of these measures the outcomes in relation to the provision of those child protection services is substantially better than it was when we came to government," she said.

"We are improving the way we work with vulnerable children and families and that's a result of a strategic approach which brings management techniques and principles, has invested substantially and is actually reforming the way we provide these services.

Premier Denis Napthine insists the child protection system is improving.

"We've worked hard to improve the child protection system but there's more to be done," he said.